Enhanced Large Cap Fund

Enhanced Large Cap

as of March 31, 2013

The S&P 500® closed out the first quarter of 2013 with a spectacular gain of more than 10%, outperforming U.S. Treasuries, investment-grade corporate bonds and non-U.S. equities. Unprecedented global central bank monetary stimulus continued to buoy demand for large-cap equities, which hit new all-time highs in March. Consistent with a strong rally in equities, low-quality stocks outperformed, but from a sector perspective, defensive sectors such as health care, consumer staples and utilities led the rally. Volatility surged in February due to the banking crisis concerns in Cyprus, but European Central Bank bailout talks reassured investors that the damage would be contained, and volatility retreated to low levels once again.

The Fund posted a total return of 12.13% for the quarter, compared with 10.61% for the Fund’s benchmark, the S&P 500® Index. Stock selection, particularly in the consumer discretionary sector, boosted Fund returns. In health care, the only underperforming sector this quarter, stock selection proved less effective as modest underweights to select biotechnology companies dragged down performance. Our sector weightings had no material effect on relative performance.

We believe the outlook for risk-taking continues to improve. Last year's halting economic recovery translated into a more cautious outlook, but recent economic news continues to be more positive. Despite periodic flights-to-quality, growth has reasserted itself again. We view this shift in market leadership as a positive sign for continued market growth and investor attention to company fundamentals throughout the course of 2013.

If you're seeking a low cost, disciplined approach to investing in equities, this fund may be appropriate for you. It seeks long term growth of capital and dividend income and invests primarily in a broadly diversified portfolio of established, large-cap companies. The Fund is intended for use as a core equity investment.

Use a multi-factor proprietary quantitative stock selection model with the goal of providing additional total return versus the S&P 500® Index.
Create a portfolio with risk, style, capitalization and characteristics similar to the S&P 500® Index while potentially providing excess returns by overweighting or underweighting stocks that have the potential to achieve the Fund's objective.
Sell securities when they are no longer attractive based upon evaluation criteria, such as valuation, price momentum and earnings quality.

Not FDIC insured | May lose value | No bank guarantee

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Please carefully read the prospectus and summary prospectus and consider the investment objectives, risks, charges and expenses of Northern Funds before investing. Call 800-595-9111 to obtain a prospectus and summary prospectus, which contains this and other information about the funds.